Saturday, October 31, 2009

Anyone else getting the feeling that this is going to be a long cold winter?

The judge is ready to throw us into jail until we admit that we -- all of Bend -- didn't quite handle our finances right.

The stock market has been fun. I put in my IRA cash, in March, and then what was left of Linda's cash, in September. But in both cases, it was because I felt the market was going up, not because I felt the economy was turning around.

I've been feeling uneasy over the last two weeks, but decided that the extent of my 'market playing' would be choosing when to put money in -- but after that, it was going to stay.

The last two weeks in sales have finally met expectations -- which isn't a good thing. I had already decided to cut back, so my instincts were right again and I'll probably not actually lose money in November. Just playing out my experience -- with the uncomfortable knowledge that I'm bound to guess wrong eventually.

Going into the "Great Recession" I had figured it would be a 7 year event -- 2 or three years down, two of three years bouncing along the bottom, and two or three years getting back to square one. So, we're only halfway through that process. You might be able to add a year or two more to Bend, because we were so excessive.

I had a whole list of 'bad news' that has been coming out in the last few days, but I think I'll pass. I think I'll bundle up, and put my head down, and just weather the storm.

Friday, October 30, 2009

Linda is back from her last trip to S.F., dealing with Lois's estate issues.

There is going to be an estate sale this weekend, than they are going to update the kitchen and make a few other renovations; then sell the house.

She brought an SUV worth of stuff back, and we're going to go look for a storage unit.

Yes, I'm not working today. I've found a young lady to work for me; she is available for the one or two days a week I might need her, she's up on games and comics and books; she had tech ability. In fact, I've just basically hired her to do the inventory. Her name is Liz, go in and see her.

Because of Lois, Linda and I won't be so near the edge of doom all the time. Bless her. Totally unexpected.

Not going to change much, just a little around the edges. Like finally feeling I can afford a part time employee, and a little time off.

Thursday, October 29, 2009

Somebody tell me if I've got this right: Cascade Bancorp has two investors (one of whom is already heavily invested in the bank and is trying to save his investment) who will contribute 65 million.

Sounds good, right?

But, later in the announcement it says:

"The Private Offerings are subject to several closing conditions, including,among others, (i) the completion of the Public Offering and the receipt ofaggregate proceeds for the Private Offerings and the Public Offering of atleast $150 million (net of underwriting commissions and discounts)."

So what they're saying is, they'll invest 65 million if Cascade Bancorp can convince the public to invest 75 million. Otherwise, the 65 million isn't at risk?

But of course, if they can get the rest of the public to commit 75 million, their 65 million isn't at much of a risk anymore, is it? In fact, these two investors can get close to half of the value of the new stock just by making the offer, but only pay if it actually succeeds?

So it's only at risk if it isn't at risk?

In other words, if they lose the bet, it never happened. They can only win this bet.

So the 3rd QRT GDP grew by 3.5%. I'd love to know what percent of that growth happened in September, the 90 Pound Weakling.

I'm trying to figure out the economy, again. Both locally and nationally.

If I had a liquid way to do it, my instinct would be to pull out of the stock market right now, and wait for a 20% correction. But since I'm in this for the next 10 years or so, I'll just sit on it.

I'm wondering if I can take, say, 20% of my total investment and put in and take it out on my own timing. With the theory that as a small business owner I can get early warning signs.

Headlines like, "Stock Market Reacts to GDP News" is exactly what I was expecting back in August when I realized that -- to beat last year, I had to beat one of the worst months ever. Not hard to do. And just as Sept. was a 90 pound weakling, so was the following 11 months, so we've got easy goalposts to reach for awhile yet.

We had a nice little boost in the economy from March until now. Obama Hope, the stimulus, the Cash for Clunkers, the stock market rise, and -- most importantly for me, a slowing down of the decline in business in summer and an actual uptick in in sales this fall.

And we had our season in the sun -- if we're going to see any good business, it will be in late spring through early fall, then at Christmas. Jan. thru April are pretty much dead zones, though, as is mid-fall. So, sure. Business was better. Kicking sand in the face of the 90 pound weakling.

This last week has really sucked, though. I may still beat last year for the month of October, which was actually a pretty good month (the last 'pretty good' month in a year); last Nov. was so weak, I may be able to beat it too, and ditto December.

So things are looking up?

I guess if you think getting out of the wheelchair and into the crutches is looking up, then yes. Far from the long distance running we were doing a few years ago.

So it's time to take a step back and a hard, cold look at the local economy.

This mornings paper seems to me to be full of portents and omens. Thornburgh facing foreclosure; (by the way, Bulletin, why isn't this news in the business section?); Cascade Bancorp getting another warning from the Feds. Were they really thinking about paying out dividends? Weird stuff going on there. For a while, there was a pretty clear pattern of the stock sliding down in the first part of the week, only to jump up just before the dreaded Friday. (FDIC seems to always move in on Fridays.) This week there was a huge jump early in the week, which is fading.

Anyway, I loved the way Patricia Moss reacted to this latest warning: "the agreement"...."is similar to a cease and desist order filed"..."in August." Nothing new here, we're dealing with it, move on. Yet I can't help but think it's significant that the FDIC felt it necessary to issue another 'agreement.' I also wonder how they are going to simply raise 70 million; it isn't like every other bank on the problem list didn't try to do the same thing. Maybe Bend is different. Heh.

As if to point up the parallels to the '80's, there is an article about the founder of Bend Mercantile. What I noticed was, it was one of the many 70's businesses that the Reagan recession caught; what I have also noticed, in this case among others, is that these same business people often were able to move elsewhere and have success. Bend really was different, as in worse, in those days.

Are those days coming again? Not from the number of stores that keep opening downtown. I think we're pretty well established as a destination tourism center now -- we may see a slowdown, but we aren't starting from scratch anymore. Our population is so much bigger. Money did move into town; money was created as well as destroyed.

Wednesday, October 28, 2009

I had some sympathy for the parking violators....until I read this mornings article in the Bulletin; "Bend's Downtown Parking Offenders Want Leniency, Not Limits."

This quote was particularly off putting.

"It's a tit-for-tat war with them," Smith said. "I've figured out where to park where I want, and I will take the tickets. Some days they'll get you and some days they won't."

WTF?

This guy has gotten 850.00 worth of tickets, and had his car booted. So not only is he taking up valuable parking space because he won't walk a measly block, but he pays 60% more than if he just parked in the damn garage?

Where's the business sense in that?

Or Mike Millette, of 900 Wall, getting 31 tickets and his car booted 4 times. I buy his argument that he needed access to his restaurant while it was being created; but 31 times? I have to figure he got away with it twice that much, probably, by playing parking tag, and that stretches credulity that he "Needed" that much time.

Mike, buddy, you need to set a better example.

Given all that, this paragraph is pretty much a non-starter:

"Some business owners said they think the city should do away with parking time limits all together..."

Yeah, right. My guess is that 90% of the downtown customers don't stay past two hours, anyway. Remember, there are no limits in the evening so you can linger over your meal as long as you want. It's the owners and employees who need more than that. So guess who's likely to abuse the privilege?

I have sympathy for the minimum wage, part time employees, but if 24.00 parking is available, instead of just the 45.00 I'm paying in the garage, even that sympathy is starting to fade...

I'm puzzled why business owners would park in front of their own businesses instead of walking a block or two. Really. I mean, I see a car pull in front of my store and people get out and I think customers. They may or may not walk into my store, but if that parking spot wasn't there, there is no chance they'll walk in my door.

Grow up, people!

(NOTE: BD points out they may still walk into my door if they park farther away, which is true; if they don't just keep driving. I guess there is a better chance they'll walk into my door if they can park closer and I guess that I'd like to make it as easy as possible for them. But yeah....good point.)

Tuesday, October 27, 2009

The Wall Street Journal has a Housing "Concentrated Risks" chart; most of Florida is bright red, most of Southern Cal is bright red, Las Vegas area is bright red.

Most of the Northwest seems either white or slightly orange.

Except for one bright red spot -- smack dab in the Central part of Oregon.

**********

"U.S. 97 Project Scaled Back" Bulletin, 10/27/09.

Buried in the middle of this is a mention of Cooley Rd, and an, oh by the way, we're scaling back. Yet another nail in the coffin of Juniper Ridge?

**********

Jim Cornelius has an interesting blog in the Nugget; "Why We Do Stupid Things In The Outdoors."

He talks about the phenomenon of otherwise sensible people running out into the wildness unprepared.

"A book I read recently has some great insights into this phenomenon, which happens over and over and over again. It’s called “Deep Survival: Who Lives, Who Dies, and Why” by Laurence Gonzales.

There’s a lot to this book and any thumbnail necessarily gives it short shrift, but one of the basic points is this: The mind creates “emotional bookmarks” based on strong positive or negative experiences. Our mind goes to those when we make decisions and the emotional feedback we get overrides our rational mind, our good sense."

He could just as easily be describing Business Owners and their decisions. I usually make my worst decisions after a protracted period of success. Just this fall, September was so good that I tried to extend it by ordering probably more than I should. Keeping the "running high" if you will.

I forgot winter weather was coming, the dead season. I had a great first 2 weeks of the month, but this last week has been pretty terrible. I'll probably still beat last year, which is great, and most of the money I spent has been covered.

But I would rather have gotten a cash profit instead of an inventory profit.

I've noticed a huge drop off in tourists in the last ten days, and I'm experiencing the usual regulars drop off in the last third of every month, and Magic has played out, for the time being.

I probably went a case too far on the Magic, which isn't too bad. I'll be able to sell that much over the next quarter or so...

**********

Did a south Bend loop this morning. The south is kind of tacky, huh? I remember when it seemed to be the next big thing.

Having now looked at north, south, east and west, I'd have to say the east side is cleanest and most squared up, with the least run-down lots and least for lease signs. We're talking commercial, here.

West Bend seems like a hodgepodge, with everything crammed. North is pretty industrial, and half run-down. South is even more run down.

Monday, October 26, 2009

I've been saying for awhile, now, that movies don't really know what's about to hit them. Neither do electronic gaming stores. They think they know, but I don't think they do. I think independent bookstores, battered and bloodied by Amazon and the chains, are probably aware, but in denial.

There's an interesting article on Eurogamer, "Digital Survival" which says in part:

For one industry grouping, however, there's a single question which dwarfs all of those concerns. If you're a retailer, your only real question about digital distribution is straightforward - where the hell does this leave me?

The examples from other industries undergoing this transition are not promising, since they tend largely to focus on metaphors involving creeks and a distinct lack of paddles. Bricks-and-mortar retailers of music and movies have largely sat back and grumbled while their businesses were hijacked, first by online retailers of physical product and then by digital distribution services. Music is much further down this path than movies are, but there's no question that they're both headed for broadly the same destination.

Specialist games retailers who follow that model face little more than a decline into insolvency in their medium-term futures. Worse again, they face competing with far bigger companies to retain their slice of an already shrinking pie - as boxed game retail sales fall off in favour of digital distribution (not to mention the downward price pressures I discussed last week putting the thumbscrews on margins), supermarket chains are increasingly seeing high profile games as a worthwhile loss-leaders.

That's kind of what I've been saying, both that it's coming fast and that there doesn't seem to be much a smaller retailer can do about it...

Word is, these new e-readers aren't great with the graphics, so there is an irony in that comics and graphic novels may endure longer than the prose novel as a viable paper product. Heh. Also, word is, and I've noticed it in my own store, comics have held their own during the Great Recession. No one was really sure at first, and it didn't look promising when I lost some old customers....but they've been replaced, and there have been some terrific storylines, like Blackest Night, which have sparked interest.

Anyway, when it comes to Digital Distribution, I'm going to just try to keep on top of it.

Personally, I'm so used to having market share disappear, that my solution has been to keep adding product lines, each of which is smaller than it used to be, but together is as big as it ever was.

This has worked so far. I suppose as long as I can keep juggling a diverse product line, I might be able to see it through. It helps that I have foot-traffic, for whom everything in the store is 'new' and 'unusual' and who are often willing to buy on impulse.

By the way, I saw a talk on Book T.V. from the author of "CHEAP, the High Cost of Discount Culture" which pretty much has been the way I've been thinking. I am NOT a consumer, and "deals" don't have much effect on me. (Well, I buy "deals" for the store, but that with the idea that it doesn't matter if I like it, only that I think someone else might like it.)

But I see it everyday in the store. The book the customer wants -- which I have new because I rarely see it used -- is put back in favor of a book they want less just because it's cheaper.

What a way to live. Always getting second best because it's cheaper....Then not liking the cheaper thing, and never using it or throwing it into the back of the closet, or worse, buying a storage space for all your 'stuff.' Spending more time and energy to get something cheap than the damn thing is worth; and meanwhile depriving themselves of what they really want; and if they had bought it for full price they would've already forgotten and just remembered whether they liked it or not.

I ordered CHEAP this morning. A hardcover. A retail price of 25.95. So the irony being that probably no one will buy it....

Whether you like Obama and his policies or not (and I very much do), it's maddening to see the pace he has taken.

But on almost every issue, health care, bank reform, economic policies, it seems like just as I'm about to give up on him, he'll either say or do something which makes me believe he is actually on course.

The pace he is on may be more in line with legislative reality. We're so used to quick pronouncements, and 24 hour news, that we think, wham, bam, it ought to be done.

Maybe this is a good thing. How many progressive ideas have been touted only to go nowhere? Maybe they went nowhere because the necessary groundwork wasn't laid behind the scenes. Maybe they went nowhere because they were all hot air and a sap to the politics, instead of real change. Maybe they went nowhere because the politicians were more interested in making political points than in compromising for a solution.

It's also interesting to me that by keeping a slow steady course, just like he did in the campaign, it gives his opponents time to do stupid things. The upshot of the angry protests this summer, I believe, was that it gave Obama more, not less, credibility. The upshot of the health insurance industry threatening to raise premiums, was to make the public option more likely. It's almost like he just wears them down by his cool.

Like I said, Obama keeps surprising me by making what appears to be steady progress. At least enough for me to keep faith. He's either a very smart behind the scenes player, or a dull plodder who will never get there. I'm still hoping he's the former.

Sunday, October 25, 2009

I've been hearing a lot of grumbling from my customers about their jobs.

I've been advising them not to quit.

I love the phrase "more productive" because what that really seems to mean is getting more work out of fewer workers. That's capitalism.

Sadly, I think these economic times are allowing bosses to be a bit more bossy.

But I really don't get a sense that these 20 - 35 year old workers are quite getting the message, either. I hear an awful lot of -- "I can't live on that wage. I can't take that job because it isn't enough...."

Not sure what to say to some of them; many of those higher waged jobs aren't coming back, at least to Bend. Unemployment is tiding them over, but a lower wage job is anathema to them. Leaving town may be the only option, presuming it's better anywhere else.

There is quite a bit in the news about the 'underemployed' which makes it seem even more alarming. But my observation from street level is that the 'shadow' employment is probably almost as big or bigger than the underemployment. An awful lot of people seem to generating income that isn't strictly 'real' jobs -- even though they're being paid.

I've come to realize, too, that times like this actually produce MORE competition rather than LESS. Not well capitalized competition, mind you. Bootstrap competition. Like in all business start-up scenarios, some will succeed and most won't. The ones that don't will be in even worse shape after it's over. I guess my advice is -- if you are willing to work harder for less money, especially at the beginning, then by all means open a business. If you think it's going to replace that high paying job?

Not so much.

Obama's request that small business loans be ramped up? All I can see is increased borrowing, which I think is exactly the wrong thing to do right now. But that's coming from someone who is cutting all borrowing, not adding to my borrowing.

I'm afraid this whole stock market increase is nothing more than extend and pretend. Just as borrowing money to open businesses is putting off paying the piper. Just as borrowing money to go to school is putting it off. Just as the city still seems to think revenues are on their way. (This one still sticks in my craw, since so many of us saw the city council spending money like it was monopoly money....)

These are survival choices -- getting by today and assuming you'll be able to pay it off in the future. (Just as using a credit card is -- the absolute worst way -- to extend your lifestyle.)

Slow and steady wins the race. I'm glad I'm established enough, experienced enough, to wend my way through these pitfalls -- at least better than I could've 20 years ago.I happy that downtown Bend seems to keep attracting new businesses -- the "Opening" side of the list is almost as long as the "Closing" side. This doesn't necessarily signal success -- just a willingness to take a chance.

Which pretends and extends downtown's energy into the near future.

There have been some changes in my life that has made all this much less perilous. Still, I want my business to succeed -- to continue to succeed -- and that means trying to get an accurate gauge of what's REALLY going on.

Saturday, October 24, 2009

Linda is making one last (hopefully) trip to S.F. to settle all of Lois's estate issues. It's killing me that I can't go with her. If it was a two or even three day trip, I might put a sign in my window and be damned. But it's more likely a four or five day trip.

She's driving a friend's van down, so I dropped her off at the BookMark this morning, and had Greenie to drive around for another hour.

I'm always giving people grief over not knowing what's in their own town, so I decided to take an hour circuit of the north part of town.

I came up with all kinds of severe judgments....well, not really. I think I'm becoming much more mellow. I noticed several of the old Mountain View Mall neighbors spotted at different locations. None of the new locations, in my opinion, equal to the Mt.View locations -- at least before the Mall disintegrated.

I think a nice indoor mall wouldn't be such a horrible idea. Maybe an indoor/outdoor type.

The thing I've noticed about Cascade Village type malls is that they are all of a similar design. Which I suppose is the point. But the diversity and different timespans of more organic grown locations, like downtown, seem much more flexible. I think that overwhelming style could get old awfully quick. Get dated. Get boring.

The other conclusion I came to was: we'd better hope that Bend retains it's metro level of population 50K/100k, or we are so overwhelmingly overbuilt it'll be big trouble. I expect we will retain at least that many people, but the tipping point is closer than is comfortable.

That was yesterday.

Today, I got into my black Toyota, The Black Dragon, (it has pop up headlamps which make it look lizardy....) and realized I was in the wrong car. I apologized to the car for leaving it in the garage.

Does anyone else anthropomorphize their cars like that? Giving them names is the first sign of madness. We're thinking of turning the Dragon in for a new car, and I already feel guilty about abandoning it.

It feels kind of funny for this native Oregonian to be driving a car with Cali license plates. Especially a car with leather seats...

Friday, October 23, 2009

I had a young fellow in yesterday who had owned a comic/game store in Boises. He'd sold out to his partner, but was thinking of giving it another try. I found myself saying, "You're young. Why would you buy into such a small industry? One whose future is in such doubt?"

Before I go any further, I want to say that both our stores, both Linda and mine, are doing extraordinarily well. My store, probably because my experience has finally kicked in at a useful level, and because I've found a mix of product that seems to work. A mix that can be adjusted with the changing times. Linda's store is doing well because of the location, because our policies worked, because -- if I do say so myself -- it's a nice store, and most of all because of Linda, who is a friendly face to all the customers.

But change is happening fast.

The American Booksellers Association has gone to the Department of Justice to make a complaint about the plans of Amazon, Target and Walmart to sell books for 8.99.

he American Booksellers Association, the trade organization of independent booksellers, has asked the department of justice to investigate Amazon, Walmart, and Target, charging that the three companies are engaging in “illegal predatory pricing” of books, which it says is “damaging to the book industry and harmful to consumers.”

The booksellers’ organization is reacting to the online book price war between the three companies, in which all three companies are selling advance order hardcovers with $25 to $35 MSRPs at $8.98 to $9.00 (see “Target Joins Online Book Price War”). Since publishers have confirmed that they are not selling to these retailers at special prices, the companies are losing money on every sale, as much as $7.50 per sale on a $35 book.

“By selling each of these titles below the cost these retailers pay to the publishers, and at the same price as each other,… Amazon.com, Warlmart, and Target are devaluaing the very concept of the book,” the association argues. “Authors and publishers, and ultimately consumers, stand to lose a great deal if this practice continues and/or grows.”

The association notes that the pricing of digital editions at $9.99 by Amazon, also below the companies cost, precipitated the price war.

It also argues that for the retailers involved in the price war, books are being used as loss leaders for other merchandise, but that “the entire book industry is in danger of becoming collateral damage in this war.” The ultimate result would be the concentration of purchasing power in a handful of trade buyers, along with the ability to raise prices unchecked by competition.

I suppose they have to try, but I have my doubts this is going to be effective. Plus, it makes the independents look like a bunch of whiners trying to keep customers from saving money.

Still, a legal challenge could ultimately be more effective than an appeal to the consumer to think about the consequences. Consumers don't think about consequences. They see cheap. They want cheap. Cheap. Is. What. They. Want.

Other stormfronts?

Disney/MarvelWarner/DC

The rising cost of comics, the inability to break out of the ghetto, no matter how many big movies get made of comic properties.

Then there is Kindle, or as it looks now perhaps even more dangerous, the new NOOK, from Barnes and Nobles. There is an article in today's Slate:

The Nook of DoomBarnes & Noble’s new e-reader could kill its business.By Marion ManekerPosted Thursday, October 22, 2009 - 5:18pm

Barnes & Noble (BKS) held a slick press event earlier this week to announce its new Nook digital reader. William Lynch, president of online business, was justifiably pleased as he stood cradling the cute arrival. But even though the Nook offers improvements that trounce the Kindle, it is hard not to see the device as a doomsday machine that could destroy B&N’s beleaguered business.

The focus of this story is how the Nook could ironically end up killing of the brick and mortar B & N's; but it could be argued it will have an even more devastating effect on independent bookstores.

I will presume to give my bookstore brethren a bit of advice. Don't underestimate the impact of new technology. It's coming. There isn't much you can do about it.

So what ya gonna do? You can't stop progress, right?

If I was a stagecoach stop, this is where I'd think about adding some gas pumps for these newfangled horseless carriages. I'm not sure what the equivalent of that would be nowadays, and I'm betting the changes are going to work out in favor of the big boys, just as it's nearly impossible to compete on new retail in DVD's or CD's or Video Games.

I'm betting I can keep finding the niches. (Notice how I keep using the word "betting?") I'll need to be quick and flexible and adept. Either that or stubborn, persistent and durable.

Meanwhile, I'm betting that though the brick and mortar presence in books and games and toys and so on will continue to shrink, that there will be a lucky few that will find a way to attract the browsers.

Being in a busy downtown, for instance, or situated on a busy corner. Finding ways to attract the impulse buyer, having stuff no one else has, and making the experience of shopping a social and physical pleasure.

But like I said to the kid above; if I was much younger, I'd be thinking about whether I wanted to commit my career to such a hugely uncertain future.

Thursday, October 22, 2009

Poked my head in the door of the new furniture place and asked what it was going to be called. Haven Home. I know there is a store in the Old Mill district, so I called them and confirmed they are moving downtown and hoping for a November 6th opening. (Caller I.D. is very disconcerting, they knew it was me, read the blog. Which is why this list needs to be totally objective.)

That said, I think it's a great location. I assume they still want you to visit their current location....

Chuck of the Downtowners popped his head in my door, and mentioned that they are rethinking the parking situation. He also said a new restaurant is opening in the Deep location, called 5 Spices.

A guy came in with a clipboard the other day, another petition. I prepared myself to say, I can't sign this because I don't know enough about it...

Then he told me it was about charging for the Mirror Pond Parking.

I signed it immediately, and I noticed that every other business I knew of, every business on my block, had signed it.

It's a, well duh, moment.

I've said it before and I'll say it again and I'll keep saying it: we need to provide downtown employees with FREE parking, or, at the least, a very minimum rate. It can be a bit off the beaten track, a block or two away, but it needs to be very, very affordable.

Think of it this way. If you are a part time, minimum wage employee, your take-home pay per month may be less than 500.00 per month. Parking, at the cheapest, is 45.00 a month, or nearly 10% of your paycheck. To someone only making a little over 100.00 a week, 45.00 is a chunk of change.

Of course, there will always be the idiots that would rather wrack up 22.00 tickets, but no amount of carrot or stick will change their behavior, so you're just punishing the rest of us.

Independent - and sticking to itHow small bookstores deal with corporate competitionBy David Holley / The BulletinPublished: October 22. 2009 4:00AM PST

O.K.

The Money-quote from today's article:

"Duncan McGeary, owner of Pegasus Books in downtown Bend, said the price cutting doesn’t bother him because he caters to a different set of readers. He sells mostly used books and some new literature.

McGeary said if people asked for some of the best-sellers, he would order them. But so far, he hasn’t had to.

“I didn’t get the Dan Brown book. I didn’t have anyone ask for the Dan Brown book,” he said. “I have Alexander Dumas and Charles Dickens.”

Well, la-de-da. Don't I just sound all snooty.

"I only carry 'lit-er-a-ture...', he sniffed.

Still, there seemed to be a lot of agreement amongst the independents about the whole issue of cheap books.

We've already lost those readers at 50%; so going to 70% off won't make much more difference.

This was the genesis of my "What If" entry the other day. (I have a policy of not stepping on an article I know is coming if I've been interviewed.) (And, oh by the way, Jim, 'weak' entry or not, it got a couple of dozen comments....)

And, oh by the way, I DO carry new books -- I just don't look at the 'best-seller' lists. I wish the article hadn't given the impression that I don't do new books....

I repeat: I DO CARRY NEW BOOKS AND I WILL ORDER ANYTHING YOU WANT AND WILL GET IT WITHIN A WEEK!

Anyway, the corporate types are creating a 'new norm,' and people will expect this kind of price-cutting from now on...

Personally, I think the corporate world is full of idiots.

"Hey, Boss! I've got an idea. Lets sell the books we're MOST likely to sell the most of this Christmas....get this....for 1/3rd less than we paid!"

"Brilliant, Mortimer! That's why we sent you to Stanford Business School!!"

"But, Sir, wouldn't that just meant the competition will match our price?"

"Shut up, Percy. I'm tired of your negative thinking. You're fired! Now then, Mortimer, who are the authors we can sell the most?"

"Easy, Boss. We'll just pick all the best-sellers, you know, the ones that account for 80% of our sales."

"The big name authors, eh? Brilliant!"

"Isn't this exciting, Boss? I can see it now -- trucks full of shiny new books, transported and cataloged and shelved and sold....every one of them for a loss. What a sight!"

"What are you grumbling about, Percy? Of course it's a one time deal. Of course people won't expect every book to be that price in the future. What did you just say? How rude! I would never stick a book there! Out of here, Percy! Never darken my doors again!"

Wednesday, October 21, 2009

Long ago, it appeared to me that the commercial real estate bubble was just as big or bigger than the real estate bubble, especially in Bend. I didn't know what it was called, I'd never heard the acronym CRE, but I believed too many commercial buildings were being built, and rents were getting unrealistically high.

So imagine my relief to read this article:

Commercial Real Estate Debt Won't Be the Next Shoe to Drop, Economists Say

Oct 20, 2009 12:55 PM, Elaine Misonzhnik

Yes, that's right. "WON'T" be. It will be a shoeless recovery.

For months, the buzz has been that commercial real estate—with $3.4 trillion in outstanding debt, $1.4 trillion of which is coming due by the end of 2012—would precipitate the next leg in the credit crisis and possibly derail the broader economic recovery. To some, that mountain of debt coming due represents a clear parallel to the trillions of dollars in residential loans that helped destroy more than 100 banks and made the current recession the deepest and longest since the Great Depression.

Um, so far.....so bad?

The situation seems especially ominous given that commercial real estate values are off 40 percent from market peaks and credit markets are barely out of hibernation mode. That means indebted owners can't sell a property and repay their mortgage with deal proceeds. It also makes refinancing difficult. Today, borrowers have to put more of their own equity into a deal and lenders have tighter standards. Loan-to-value (LTV) ratios are not only lower than they were at market peaks, but have to be based on the current value of the property, which is lower than it was a few years back. That means a bank might want to replace an 80 percent LTV mortgage on a property once worth $10 million with a 60 percent LTV mortgage on a property now worth $6 million. To some people, this is sending off warning bells that commercial real estate may do as much damage to our financial system as residential mortgages did in 2007 and 2008.

Still not looking good, but I'm sure they'll get to the point.

Yet according to many real estate economists, this fear is largely misplaced. Commercial real estate debt will likely stall the recovery in the credit markets, they note, but because of a combination of factors, including the limited impact of commercial real estate loans on the overall economy, it won't bring about the same wave of distress as the housing downturn did.

"As far as the impact of commercial real estate on the overall economy, I don't think it's going to be the next shoe to drop," says Robert Bach, senior vice president and chief economist with Grubb & Ellis, a global commercial real estate services firm. "These problems are focused in regional banks and the Federal Deposit Insurance Corp. (FDIC) has a tested method of shutting those down on Friday and opening them on a Monday under the auspices of a bigger bank. These are not too big to fail banks. I don't see [commercial real estate] as an unmitigated disaster—I see it as a repeat of what happened in the 1990s, but the economy can handle it."

Oh, what a relief. Uh.....wait a minute. Your reassurance consists of -- "it won't be an unmitigated disaster" and "the economy can handle it." ??!!

The good news seems to be -- it won't bring down the big banks or require a bail-out; it will only bring down those pesky small regional banks and who cares about those since we have the FDIC? Then follows two paragraphs detailing the problems that the FDIC is having financing this bust, but the tone still seems to be..."What Me Worry?"

The FDIC, however, faces some concerns. A recent analysis by the agency's Office of Inspector General found that during the peak of the real estate market many banks ignored FDIC's 2006 recommendation that they keep commercial real estate holdings at less than 300 percent of total capital. Meanwhile, after dealing with 100 bank bankruptcies last year, today the agency is facing a deficit for the first time since 1933 and might lack the funds to deal with the potential fallout of a commercial real estate crisis.

In 2009, bank failures cost the agency $25 billion on top of the $20 billion it doled out in 2008. To deal with the money shortage, the FDIC is requiring banks to prepay $45 billion of insurance premiums by the end of this year. The premiums would cover the fourth quarter of this year and all of 2010, 2011 and 2012. Overall, the agency is projecting that bank failures between 2009 and 2013 will cost it $70 billion.

Followed by another paragraph about how the CRE market is going to be "battered" for the next few years. "Battered" is their word.

Meanwhile, more than $1.4 trillion in commercial real estate loans are scheduled to mature between 2009 and 2012, including $320 billion next year, according to ING Clarion Real Estate, a real estate investment management firm. That's coming at a time when new sources of refinancing remain scarce and valuations of commercial real estate properties are getting battered by weakening fundamentals. In the first half of 2009, the volume of distressed commercial assets grew 122 percent, ING reports, to $138 billion, including $32 billion in the retail sector.

Still waiting for the good news, guys....Oh, here it is:

The good news is that total volume of commercial real estate debt is about a third of the total amount of outstanding residential mortgage debt, which stands at approximately $10.9 trillion, according to the Federal Reserve Board's figures.

What's more, because the residential mortgage crisis affected almost every homeowner in a country with a homeownership rate of 67 percent, it had a devastating impact on consumer spending, which makes up about 70 percent of U.S. GDP. During the housing boom, Americans would refinance their homes and use the proceeds to shop till they dropped. Once refinancing became impossible, consumer spending dried up. By contrast, troubles in the commercial real estate industry might cause damage to banks and large institutions, but will have a limited effect on Main Street, says Clint Myers, strategist with Property & Portfolio Research, a Boston-based real estate research firm.

So....since it's 'only' a third as big as the residential real estate market and because it doesn't affect the consumer directly, we're golden! As the following paragraph says, it only really impacts on regional banks, and who cares about those?

Any potential damage will also be mitigated by the fact that commercial real estate debt has been largely concentrated on the balance sheets of regional banks, rather than the big national players, and that most of the loans issued before 2005 feature solid underwriting, adds David J. Lynn, managing director with ING Clarion Real Estate.

So, we don't need to worry because "most" of the CRE were issued before the boom, and therefore are more solid. Hmmmm.....well, yeah. Just like most housing loans were issued before the boom and are therefore solid.

But....well, guys, we're ARE talking about the boom and bust, here. I'm sure the loans written 20 years ago are even more solid. I think maybe the real estate agents missed a real handy excuse:

"Well, gee, all the loans we made before we went bat-shit crazy are still solid. What about those, huh? We were pretty good until we were bad!

Today, 54 percent of all commercial real estate loan defaults come from loans sponsored through commercial mortgage-backed securities (CMBS), which were a major source of real estate debt between 2005 and 2007. Loans issued by national and regional banks account for only 12 percent and 11 percent of all defaults, respectively.

The preceding paragraph seems to contradict everything they had said up till now. It appears that the problem is, in fact, a more general national problem -- Commercial Mortgage Backed Securities -- issued between 2005 and 2007.

But again, no worries, because the government won't let the big guys fail:

After the collapse of Lehman Brothers, the government isn't likely to let another big national lending institution go under, so most of the damage from bad commercial real estate loans will be contained in the regional bank sector, Lynn notes. And the financial system could withstand the failure of several hundred regional banks without toppling over, adds Myers.

That's not to say that all those commercial loans won't cause serious problems in the credit markets. As long as banks avoid realizing losses on commercial mortgages, commercial asset values will remain artificially high, Myers says. That, in turn, will likely limit the flow of new credit into the commercial real estate market, leaving some owners cash-strapped.

Myers doubts the possibility of another large bankruptcy in the public REIT sector, since REITs have proven they can raise enough funds to survive through equity offerings. But there will likely be added pressure on privately-held real estate investment firms.

The article rounds up, reassuring us that it's "only" local and regional banks that are going to fail, and who cares about those? I'm sure Umpqua and CACB are totally O.K. with that....

"The real stress in the system [will be on] the banks," he says. "The pace at which regional banks fail will probably accelerate from this year to the next. And what it will mean is that there will be very little new lending activity for commercial real estate and it's going to be very hard to grow."

See? Nothing to worry about.

What's interesting about these types of articles, is that if you just read the headline and the general tone, you'd think things were O.K. But if you read the content, and think about what it's saying, it's anything but O.K.

Especially interesting since this article seems directed to the retail market and you'd think that retailers would be a little more savvy.....you'd think.

The only good news I could see in this article was that the CRE debt was only a third the size of the residential RE debt. Except, I suspect that most of that retail development was concentrated in the boom areas. If a town suddenly becomes 'metro' it's going to be followed by retail. If a town thirty miles away from the city becomes a hot residential area built up from the ground, it's going to be followed by a host of new commercial. Anyplace runaway residential took off, it will be followed by runaway commercial.

Especially towns like Bend.

To me, the most ridiculous part of this article is how it's O.K. if local banks go down because they're covered by the FDIC.

That's a bit like saying, it's O.K. to die, because you've got life insurance.

Exploring the site further, I find that Bend is listed in the "Fastest Small Business Growth" list. (2004 to 2007). I suppose fastest isn't always best, not to mention this was during the boom, and we all knew that.

Sunday, October 18, 2009

It's such a luxury to be able to reorder everything the store needs every week. All those years of just struggling just to get the basics were tough. It was hard having to decide between getting small, but inadequate amounts of everything, or larger adequate amounts of a few things. This was happening for most of my career, actually. At first I was just trying to build up, and then I was just trying to maintain.

A sign that things have changed:

I did something very different for Magic this time. I OVER ordered. As a result, I felt pretty free in breaking packs and stocking singles, and as a result, I seem to be getting more foot traffic and selling the boxes more often.

If only it was always so easy. Overordering is great...when it works. But deadly when it doesn't.

About 8 years ago, I identified a monthly sales level that I calculated was the amount I needed to do a good job. Such an average sales level would pay the overhead, pay the merchandise, pay a good wage, and have enough left to experiment (a little) take chances (a little) add product (a little) and fix up the store (a little.)

We overshot that level during the boom years by a good 15%; then dropped below that level a good 15% over the last couple of years. I compensated by working the store alone, and was able to keep the store stocked the way I wanted.

Don't get me wrong. I still mostly stick to budget, with a few exceptions.

I had to stretch the budget at times over the last year or two, and then take a breather, but mostly the store has kept to a very high level of responsiveness to product sales. Lately, I haven't even had to stretch the budget.

I think we may be creeping back up that that basic sales floor I identified 8 years ago; and it really shows.

It's easier to keep up when it's easier to keep up, if you know what I mean.

Four new businesses that I'm aware of; though I don't know the name of two of them, so have just given them the generic name until I learn the real names.

With the addition of The Good Drop, there are now three wine shops on my street.Across the way, where Ivy Rose Manor was, there looks to be a Doggie Business going in. Where Luxe Home Interiors was, it looks like a.....you guessed it....a furniture store is going in. And I caught a blog this morning about Cowgirls Cash opening on Brooks. Anyone know any others?

Downtown continues to show impressive rental strength, though the need for rentals shows an underlying weakness, obviously. In the building across the street, 4 out of the 7 stores have been there less than a year, most of them less than six months.

Friday, October 16, 2009

Lois drove a 1999 Solara Toyota; apparently very little. Only 20k miles on it. It feels new to me. It has all the things that my 1990 Corolla doesn't have; airbags, working inside lights, automatic lights and locks, etc. etc.

I love the color, a dark green that can look black or green depending on the light.

I've been teasing Linda that it was my turn to have the 'new' car, and she agreed. Plus, she doesn't like 2-doors, and really wants a 4-door. Since we have a 2 car garage, something has to go.

I've known from the start that we would have to give up Linda's car. Most likely give it to one of our kids. My car has a leaky trunk, which is O.K. since I only drive it from my garage to the downtown garage. Anyway, water gets in there and it wouldn't be a good fit with Portland.

Sure enough, a couple of days ago one of our sons lost his transportation, so he's coming over to pick up Linda's 1991 Toyota Camry.

It was fun pretending that the 'new' car was mine, though.

Last night, I finally relented and said, "Look, it makes no sense for us to do anything but have you drive the new car..."

And, she felt bad about it, and quickly agreed. Heh.

Really, I don't care what car I drive. It will be nice to have a high functioning and perhaps safer vehicle for trips, but other than driving to and from work, I don't need much transportation.

Today's my last day with 'Greenie'; though Linda says I can drive it on her day's off....right.

Thursday, October 15, 2009

The quotes from Patricia Moss about Bank of the Cascades in the Bulletin this morning were pretty choice, and I really wanted to 'comment' on them; but it's a little too much like kicking them when they're down....

The weather has definitely dampened my sales, which is to be expected. We got a little extra nice bonus weather in there. But I held off buying that last case of Magic, because I think I have enough now.

The 18 boxes of new books showed up, finally, and I'm just sort of staring at them and they are just sort of staring at me back. My mind says yes, my body says no.

I'll get to them, eventually.

Meanwhile, just maintaining the store and feeling pretty good about the general thrust of the trends.

I've always tried to be candid in this blog. I believe that what charm it might have comes from that candidness. It gets me in trouble sometimes, but its so much easier to just try to be honest, then to try to dissemble.

Sure, I probably haven't been 'minimum wage' for a while now, but it isn't a huge exaggeration, and it was certainly true when I first came up with the phrase and for most of my career. We had some success over the last 8 years or so, first because of the boom, and then because I prepared for the bust and managed to pull some profits out.

But to put it into perspective, I was talking to a guy who had thought of buying my store several years ago, and told him how much he could probably take home now. He just shook his head, and said, "That's nowhere near enough."

It's all relative, I guess.

So nothing is really going to change in my lifestyle or my work life. The store will pay for whatever improvements, and it will continue to pay me a living wage. I still like what I'm doing.

The guy who was talking about Mom and Pop stores on C-span did say one really interesting thing: it's important for the owners of such store to be a 'presence' in the store. I totally agree with that; I mean, I don't need to be there every single minute, but I'd have to say 'most' of the time. Otherwise, find another job.

Besides, I like being in charge. I would love to run the store every minute, if it didn't wear me out, burn all the little slack I've got.

Wednesday, October 14, 2009

Not meaning to get all Hallmark Moment on it, but this isn't just great music, this is the soundtrack of my life. I remember going to a party at the big house in Drake Park (yes, there was actually a house on the park side of the river, just below where the parking lot is now) and dancing to I Wanna Hold Your Hand.

I remember my brother and sister playing Rubber Soul over and over again, so that to this day I know every word and can start singing the next song before it starts.

The first few albums I never owned. The first I remember actually having is Beatles '65, which in this set is "Beatles For Sale." I loved the song, I'll Follow the Sun. I think these songs are the ones I hear the least nowadays.

I remember winning the Lady Madonna single at a Jr. High limbo dance contest. I played Hey, Jude on the High School jukebox so many times, that I think my classmates were groaning. (I'm actually a little embarrassed by that....)

I absconded with Rubber Soul (sorry, Tina), and Revolver (sorry, Mike) , and purchased Magical Mystery Tour. Revolver and Magical Mystery Tour disappeared in my old rented apartments with roommates phase of my life. A lot of good albums disappeared that way. Karma.

I remember my big brother buying Sgt. Pepper's Lonely Hearts Club Band in Portland, in our yearly trip to the big city to buy clothes. And my memory of what seemed like a city wide block of department store is inextricably linked. A magical land. I remember not liking it at first, and then slowly but surely becoming fascinated by the seemingly brand new sound.

I bought the White Album with the money my parents gave me to eat on a debate trip to Eugene. (Many of my albums were purchased by a starvation diet...)

What I remember about Abbey Road is playing it over and over and over again, and seemingly hearing something different every time. I don't know if I love this music so much because it's great, or because it hit me when my hormones were in overdrive, or both.

I put on the first disk of the set last night, intending to listen to just one. Ended up closing my eyes on my futon and just soaking in the beautiful sounds for a couple of hours.

I don't know how my customers are going to take it, but I'll be having a Beatles marathon at the store for the next few weeks.

Tuesday, October 13, 2009

(This is really, really inside baseball, so some of you may want to skip.)

I want to price single game or sports cards low enough to encourage frequent visits, but not so cheap I actually lose money on them. Basically, the more people who buy, the lower in price I can be.

But lower prices don't always encourage frequent visits. Sometimes, it actually makes sense to raise prices with lower frequency. Probably the opposite of what most people would think.

But unwanted product is unwanted product, no matter how cheap.

So I'm constantly trying to find the golden mean.

Back in the sports card days, at first I could sell most of the singles I had. Then, as the customer got more selective, I'd sell mostly the stars. I had competition that would have oodles of certain stars, whereas I'd seem to sell out immediately.

I couldn't figure it out.

I arrived at a formula. Open a box of cards, make one stack of card that I KNEW I could sell, a second stack of cards I THOUGHT I could possibly sell, and a third stack of cards that I figured I'd NEVER sell.

If the first stack and half of the second stack added up to the retail price of the box, it was worth opening.

This got harder and harder to do, despite the 'inserts', which were extra cards that were 'special'. The year that Ichiro came out in baseball cards, I realized that customers were ONLY buying Ichiro.

Jacoby Ellsbury is another example. Local kid, "hot" rookie. I realized I had two boxes with his cards in them. Math told me, there was an average of one per box. The boxes were over 100.00 each, his Rookie card was worth between 10.00 to 20.00.

I waited until someone was willing to buy the box.

Meanwhile, I'd pretty much stopped even trying to sell singles.

Until now.

I think I've stumbled across the current best pricing for Magic singles. Which is only working because:

1.) There is interest in Zendikar signles and they are actually selling.

2.) I have plenty of stock.

3.) I can sometimes make an 'extra' sale, of supplies or packs. In this case, just getting customers in the store can make a difference.

I lowered my prices for most 'rares' to 2.00, from 3.00. I lowered my prices on 'uncommons' from .50 each, to 3/1.00. 'Commons' I kept at .10, because it ain't even worth storing and handling for less.

My rare 'rares' (4.00 to 20.00 each) I'm trying to price at two or three dollars cheaper than the online sites I go to.

All this has seemed to be a surprising success. I may not be making my normal margin, but I'm selling lots of stuff.

Monday, October 12, 2009

Interesting series of articles in the Oregonian: "Life after the Bubble: From boom to bust."

I refrained from commenting on yesterday's entry, which had as it main poster children a couple who built themselves a 2600 sq. ft. house, then mortgaged it to the hilt to start their business, and who, when they finally threw in the towel, owned 3 cars, including a 2008 pickup.

Can't reporters find people who are real victims, instead of these people who really don't appear to deserve our sympathy?

Anyway, today's article discusses the take-over of Harry and Davids. Typical corporate pirates took over the company, looted it, and then drove it into bankruptcy, in the meantime driving their workers into the ground. Nothing new there.

Second feature as about a chain of stores based in Portland called Storables.

"Dodd Fischer founded the company in 1982, and over the ensuing 27 years he built it into a small but consistently profitable chain with nine stores in five states.

Fischer, cautious by nature, built his business strictly out of cash flow. When other companies were leveraging themselves to their eyeballs, Storables had no bank debt.

But it didn't matter.

When the economy really got frightening in September 2008, when Lehman and Washington Mutual were failing and something truly cataclysmic seemed inevitable, Storables' sales plunged.

"They just went off a cliff," Fischer said."

O.K. Fair enough. So far, I'm sympathetic. I too built four stores with ever increasing sales. I didn't do it completely with cash-flow, but had a couple of bank loans. But the loans weren't draconian, and were well within cash-flow, if you will, as long as the stores were "profitable." It's hard to resist the urge to expand when you're successful.

It goes on:

"Fischer kept on thinking and hoping that the trend would begin to reverse itself. But it didn't.

What Fischer and his team didn't appreciate at the time was that their company had been the beneficiary of a housing bubble and consumer spending spree fueled by a towering wave of consumer borrowing."

Again, I can relate. When my sales started falling off the cliff back in the early 90's, I too, held on thinking the trend would "reverse itself." It never did.

It was the following quote that really caught my eye. Again, I can remember thinking the same thing.

"There were times when we couldn't explain why our sales were going up," said Greg White, Storables' longtime chief financial officer. "We knew that people were refinancing and that interest rates had been dropping. We just didn't understand the scale of it all."

A couple of things I learned, in hindsight.

1.) Increasing your overhead is a form of debt. If it's obligations you can't easily cut, such as long-term leases, it's the same has taking on a loan.

I have a new rule of thumb. If business increases by more than 10% a year, somethings out of whack.

That's why I'm not sanguine about the increases in my own business over the last month and a half. Some of it actually can be explained by the year to year comparisons to the 90 pound weakling that was last fall. But some of it seems overly exuberant, if you know what I mean.

The last thing I noticed about this article is that they imply that the owners of Storables took steps to extract money out of the business at the same time as they tried to drop leases. I was never that prudent. I kept throwing money, eventually money borrowed from credit cards, at my obligations. It was the ethical thing to do, but it nearly brought me down.

I've not been faced with that choice again, but I wonder if I wouldn't be more self-protective the next time. I see owners go out of business who seem to walk away with money still in their pockets, and I wonder how they do it.

But who am I to judge?

Personally, I think the economy tanking is one of those things that periodically happen, and should be planned for. There are no victims in business, except perhaps to fraud and corporate pirates. (The employees, not the management who are stupid bastards who would sell out to a Wasserstein.)

Sunday, October 11, 2009

A very good female friend was talking about how she liked Bend, "Except for all the skinny women..."

Got me to laugh and got me thinking.

A few years ago, I saw a picture of the line of people for a movie in the Bend Film Festival. They were the beautiful people. Handsome and fit and dressed and tan.

Kind of intimidating, you know?

I wonder how much resentment from us native Bendites comes from this? Remember the old commercial, "Don't hate me because I'm beautiful." ?

I don't know about you, but my immediate reaction was, "I don't hate you because you're beautiful, I hate you because YOU THINK you are beautiful, and that I should give a damn about the fact that you're beautiful, and oh, by the way, stick it up your ass."

Maybe I just have an inferiority complex. But damn, it's hard to have a normal conversation with a woman who is decked out in the latest fashions, not a hair un-strategically out of place and skinny. I get distracted.

I suppose there is an easy cure. Just go to the county fair and sit and watch all the people walk by. Probably a more accurate median fat content there.

I've mentioned before that most business books are pretty useless when it comes to Mom and Pop stores. So I was all pumped to watch a Book T.V. session on c-span, for a book called The Mom & Pop Store: How the Unsung Heroes of the American Economy Are Surviving and Thriving (Hardcover)by Robert Spector.

How disappointing.

It was basically a paean to the virtues of the good ol' Mom and Pop.

One questioner tried to get at the nuts of the problem, by saying, "If Mom and Pop stores are 'thriving,' why am I seeing so many go out of business?"

Which the author tossed off with a, "Small businesses have always been around and will always be around."

Great. Thanks for the reassurance.

Here's the thing. Every Mom and Pop industry that I'm familiar with has probably shrunk in half over the last decade or so. Seriously. I can't speak to service businesses, or for restaurants, but I can tell you that most of the pop culture type stores I'm familiar with have been crushed. Books, games, toys, cards, comics, records, and so on.

There are individual success stories -- there always are the exceptions; which are usually run be exceptionally hard-working, or smart, or lucky individuals. But you can't base an industry on only the exceptional.

But isn't it just wonderful that have Mom and Pops! All the corporate refugees will start new businesses!

"Small-business owners are likely to feel the effects of these changes more than almost any other group of Americans. A survey released this spring by the National Small Business Association found that 44 percent of small-business owners use credit cards to finance their businesses—more than any other type of financing."

Small Business loans? "Banks cutting back loans to business" Marketwatch, 10/9/09:

- U.S. banks are reducing their lending at the fastest rate on record, tightening the credit squeeze and threatening to leave many otherwise viable businesses unable to borrow money to expand their businesses, meet their payroll or refinance their maturing debts."

Their corporate Nest Eggs?

Well, they can do that and throw their last life preserver into the maelstrom. But they won't succeed unless they scale down their expectations dramatically, and from what I observe, that's exactly what they DON'T do.

I hate to keep picking on the Greenlight Bookstore. I really do wish them success, but -- to me -- they are throwing out all the wrong signals. They announced they would open by September, and here it is mid-October, and the last two posts have been all about 1.) their friggen logo, and 2.) their friggen sign.

I've mentioned before, the book Growing a Business, by Paul Hawken. One his major points was that most new business owners get way too caught up in the accouterments of business -- the logos, the stationary, the signs, the furniture, the carpet, the procedures. And here's the Greenlight Bookstore hiring architects to design their store, and have custom made bookshelves, and spending -- apparently -- days choosing a logo.

What fun! Almost like playing 'bookstore owner'.

But a real bookstore owner would have slammed some books into the space, starting selling, and grow his business from there. Because it's about creating the intersection between the customer and product, and all the rest is just Wizard of Oz stuff.

Anyone with real design sense will "make do," and probably create a functionally fung shui space because their focus is on selling what they got. The form will follow the function.

Spending all your time on the form, instead of the function, is a way to spend lots and lots of money before you know what you're doing. The focus should be on books, not the colors of the carpet. Not on how cool the logo is.

Saturday, October 10, 2009

I've been shaking my head over the last six weeks, trying to figure out what's going on.

Business is booming. In fact, this month as gotten even better than last month.

It's inexplicable.

It's a mystery.

People always fool me.

I don't expect the last 8 business days levels to continue. That would be crazy. We're talking summer 2006 levels, here. That's just nuts.

Here's the kicker. Even if sales keep at this level through the rest of the month, the best I'll do is break even. Proof once more that it isn't how much I make, but how much I spend.

I'm feeling comfortable enough with the trends to take some chances on my purchases, which will help the store immensely in the long run. It's a constant balancing act of ordering, then not ordering, then ordering...and I don't know how to explain it except by instinct, and intuition.

My feeling is that by having the store stocked to the gills, that I'm benefiting from increased sales. It's a bit like fattening up for the winter. Magic, of course, has been my biggest gamble, but so far it seems to be paying off. Sales are high. It isn't a home run, but it's at least a single or maybe even a double. I've been given chances to buy even more magic, even though I've already purchased more than I've ever purchased, and so far I've said yes to every offer.

Like I said, the worst that can happen is that it would take six months or a year to sell out; the best is that I sell out in about a month, just as a new wave of product arrives.

So I went a little crazy with the ordering in October. In reaction, I'm tightening the budget again in November and December. November ordering starts next week. The store is completely stocked -- I don't really need much but the essentials, so a smaller budget shouldn't really affect things.

I'll be sending in my application for a Nobel Prize in literature next year.

I look forward to your response.

Sure, I haven't written much yet, but I have every intention of doing so. I've created an atmosphere of writerliness....you know, I've changed the whole tone of things. I'm not longer saying I won't be writing novels, but saying, 'Hey, maybe I will.' Not only that, but 'Hey, maybe it'll be good! I want it to be good.

Thursday, October 8, 2009

Let's imagine that you are a storekeeper with 30 years experience in the business. Let's imagine that you have the chance to create your 'Dream Store.'

Should you?

"Of course!" most people might say. But it isn't that simple.

You have to look at both the financial viability of such a move, as well as the emotional motivations.

For instance, for me, a dream store would have to be about 3 times bigger than my current store, at a minimum. This would probably necessitate at least one more employee, and probably more. If I had a couple of handy right-hand employees around, that would be just fine.

Last time I expanded beyond one store I found I lacked the sufficient managerial skills to pull it off. I'm too much of 'want to do it myself and do it right' kind of boss. I'd like to give my employees leeway, but I haven't found that most employees pick up the slack.

Lacking managerial skills, I could possibly make do with procedural standards; systems in place that would require the employees to follow a pre-set groove.

Again, I lack the technical skills to really pull that off.

Yesterday, as I was feeling the stress of putting my -relatively - smaller weekly shipment, I asked myself why I would voluntarily add to that stress.

I'm pretty sure I could do it -- if I had the perfect location; if I had the time to implement; if I could find a couple of really good long-term employees. It would be fun to see it take form, it would be a challenge to make it work, but I'm pretty sure I could pull of it off and that it would be a store I could be proud of.

Then what?

I'd have a store that I sunk a bunch of money into, but only 10 years in my career left to try to extract that money. Right now, the current store is already worth more for me to operate than what anyone could ever pay me. Improving and expanding would only widen that gulf.

At the same time, I have a store that is working very well right now. It's providing me with a 'better' than minimum wage job. I'm fully engaged in it. I'm constantly finding ways to make the smaller space work.

It comes down to my being 56 years old, I think. If I was ten years younger and had the same impulse and the same experience and the same resources, I'd probably try to do it.

But I have to remind myself that I originally just wanted a small store I could go to and talk to friends and sell the stuff I liked and just make a living. And I've accomplished that.

I'll continue to spin a theoretical construct in my head and on paper, but unless everything were to just about fall into my lap, it's unlikely I'll stretch for it. I hope that isn't 'settling for less' than I can accomplish.

But really, I'd like to actually make money for a few years, and there's nothing wrong with that.

Wednesday, October 7, 2009

It certainly has made me pause in any plans I might have had to hire anyone. I'll just wait and see...

**********

"Redmond Airport Ends Boarding Slides," says the Bulletin.

O.K. I'm going to only say this one more time, because I might get kind of annoying about it.

We are going to see this kind of headline over and over again. Might as well say, "90 pound weakling is beaten up again!!" because last fall was the 90 pound weakling of economic statistics. Just about anything can beat it.

So we've hit the bottom of the hole? I don't know if it's anything to crow about that we've grabbed a few handfuls of crumbly dirt and crawled a couple of feet upward.

Tuesday, October 6, 2009

The dying experience is, strangely, a living experience. It makes life very immediate. It makes family close. It makes emotion raw and real.

Linda's sister, Lois, has just died. She had a heart attack a few days ago, and it didn't seem all that serious at first. But she was having congestive heart failure, and she had told everyone -- Linda, her son Cordie, her brother David, her niece Norma, that she didn't want any life support.

They took her out of the ICU last night, and put her in the hospice.

Norma is in the air arriving in San Fransisco soon, Linda is headed out this evening, and Cordie is arriving tomorrow, brother Lee on Thursday.

Lois was a very put-together person. Even in her illness, she would get up and get dressed to the T's, put on her makeup, and have a neat and orderly home. It was a complete nightmare to her that she had 'homecare' people in her space.

Linda had found a temporary group home for her before she left S.F. last time, and Lois seemed content. The woman running the home had come by the hospital several times, and Lois had exclaimed to her, "Take me home!" It's comforting that she had been comfortable enough to feel like it was home.

We were going to bring Lois up to Aspen Ridge; close to us and brother Dave. She seemed to be looking forward to it.

Some of the relatives are a little upset that they didn't know more about what was happening, but Lois was extremely, extremely private. Indeed, we think she had probably been hiding her memory loss for some time, cutting short conversations, and refusing to see or talk to people.

She had asked Linda very poignant question: "When a person loses their mind, where does it go?

I think Lois was terrified of her memory loss, her lack of privacy and control. She'd lived a very orderly life by herself for many years. We had originally brought in the homecare people because we feared for her; she had proclaimed, rather loudly, that "I don't want to live like this!"

The heart attack was both a different and the same health problem, which was smoking cigarettes to the end.

There are all kinds of platitudes I could come up with at this time, but I'll refrain, and only try to give Linda my love and support.

Um....last September. What happened last September? I seem to remember McCain flying to Washington to save us from....something. What could it be?

We are going to hear headline after headline like this -- and all they mean is that we've moved one step back from the brink.

***********

Got to work on Saturday, and the streets were already coated with loose hay.

Another childhood memory of growing up in Bend. Playing in hay bales. It was loads of fun.

It was only when you got home and undressed that you found hay in every single crevice of your clothing. You'd wash your clothes (well, your mother would) and put on your fresh underwear and go to school, and halfway through the day you'd get a digging, scratching feeling in a place you couldn't do anything about in public.

So I hope the kids had lots of fun in the hay bales over the weekend. Meanwhile I'm finding hay in every nook and cranny of the store. I've just left the vacuum cleaner in the corner, and do a quick run every few hours.

Monday, October 5, 2009

Calling for Karma is a dangerous thing, unless one has a past of unblemishness.

And who has a unblemishinessic past?

I keep reminding myself of that.

I liked the snow. Of course, I stayed home and did some work and reading and otherwise just cozied up.

Memory is tricky, and my memory is trickier, but I seem to remember snow in October was frequent growing up in Bend. Maybe not this much, and maybe not this early. I seem to remember Mt. Bachelor opening up in late October, or at least in early November.

This wet snow should saturate the ground up there, and be a good surface for the next wave of snow.

But, most of all, this is just Bend, and Bend often gets snow, and why would you live here if you didn't know that? Linda and I have always thought it weird that the West Hills have so many steep driveways, and otherwise dangerous roads. We always figured that everyone up there had 4-wheel monster trucks.

I grew up on Roanoke Ave. and I'd often have to park at the bottom of the hill and hike home. Or make a run up 5th Street and circle back down.

So, like I said, memory is tricky -- but I remember snow being a constant presence in Bend. The last 10 years or so have been kind of unusual.

Bemoaning that you can't grow vegetables is just weird. The weather was here when you moved here, folks. Did you think it would change to suit your desires?

**********

I think the booths in front of my store on Saturday weren't exactly crowd inducers. Still, it seemed awfully slow to me. I suspect that two events two weeks in a row is just too much. I'm assuming these booths didn't even show up on Sunday.

Sunday, October 4, 2009

Had a very good day at the store, yesterday, during the Fall Festival. So good, I thought about opening today. Woke up, looked out the window, and decided that was a bad idea.

It was funny, a few flakes started falling mid-afternoon, and the streets cleared out. I started joking that if it was the Winter Festival, everyone would've stuck around.

I've mentioned before that, over the years, my store would go it's own way with results, because of the dynamics of hot and cold product. In fact, the Reagan recession and the Great Recession are the only two times the outside economy mirrored mine.

Right now, the magic sales are really skewing the results. Sell a couple boxes a day, and I add quite a bit to the bottom line.

**********

God help me, I watched all 12 hours of Ken Burns docu on the National Parks. I watched them all patchwork; started with the second hour of the second show, then the second hour of the third show, then the first hour of the third show, and so on...finishing last night with the first two hours.

Everytime I heard the theme music, it reminded me of the Lord of the Rings. And it is almost sincerity overdose, you know. The commentators are all so bloody earnest.

As a native Bendite, I don't see the national parks as a 'pristine' wilderness experience. A scenic experience, yes. But too well developed, at least in the accessible parts, and way too crowded. Heading into the Cascades for an afternoon walk is more a pure experience of nature, in my opinion. And it doesn't cost anything.

But I will say this -- it's a good thing they showed this show with winter approaching, instead of in the spring, or the parks would've been inundated with the barbarian hordes...

Saturday, October 3, 2009

More Poster Child of the Boom/Bust. An article in the Atlantic Monthly. Correspondents. Recession Road Trip column. 10/2/09.

Below, since I'm not sure anyone else will be posting this...

Not much more to say about it, except I think this kind of thing will keep a'comin...

ROBUST OREGON REAL ESTATE MARKET POISONED BY FRAUD

"People have tried to bribe me. I've been threatened, both verbally and with a gun," real estate appraiser Richard Hagar tells me, recounting the heady days of the Pacific Northwest's housing boom, when unscrupulous loan originators in places like Bend, Oregon would aggressively demand his work confirm a dictated appraisal value, often many tens of thousands above the actual market value. In Hagar's view, "This recession we're in was triggered by loan fraud. That's the end of it."

NOTE: Originally, I posted the whole article, but decided to post mostly the first and last of it instead. There's more...

Blog postings and chain emails trying to discredit his work circulated through real estate industry networks. One time in late 2006 or early 2007, a Bend real estate agent reached him on his cellphone, launching into a full-throated tirade as soon as he answered. "She yelled, 'There's no fraud in Bend. You can't say that. We're not scammers. We wouldn't do that. You'll destroy our real estate market,'" Hagar recounts, adding his own response: "Hmmm, actually, you're destroying your market."

That real estate agent, it later turned out, was representing a major housing developer (now bankrupt), which had begun offering illegal incentives to help close deals with prospective buyers--not an uncommon practice, but also, technically, a form of fraud. Hagar guesses the woman didn't even realize she was personally engaged in fraudulent practices, ignorance being one of the primary causes for the crime's prevalence.

Off the top of his head, Hagar can think of at least 30 Bend residents who would deserve to be indicted, tried, and convicted for their role in the fraudulent activities that artificially inflated the local community's housing bubble. However, he says, "The reality is only about 5% will ever be caught."

A massive waterpark -- if it ever gets built, which I doubt -- would create a bunch of minimum wage jobs, give off the whiff of loosey goosey that we don't really need more of in this area.

We need a serious effort for serious jobs.

This blog entry is just a bit of holding people's feet to the fire for what they've said was going to happen; the bookstore in N.Y. that I thought was so overblown didn't open in Sept. like they said, in fact they have the entry about choosing their logo still up. (Choosing their logo as the most important thing to write about the month before 'opening' is exactly the wrong kind of focus. Not to mention, of the logos they actually showed, they picked the most boring.)

The other bookstore I wrote about, is still looking for his 2 million in financing -- talk about not being serious.

(I'm not mentioning their names, though you can find them in previous posts. I say I want to hold their feet to the fire -- but really, I don't want to hurt their feelings.)

The city is laying off more people -- going into the downtime. I mean, if we are already hurting and we have Oct., Nov. Jan. Feb. March. April. and May to look forward too, we've got problems. Same for any stores. I thinking we're skating on thin ice, and there may be some plunging and splashing about to happen, and no rope to throw them.

Here's where I contradict myself. Downtown is bustling, I must say, though the last week has been pretty slow. My business has stayed a bit stronger than I expected, and I've come to the conclusion that the population rise in Bend over the last decade is now coming along the create a solid enough ice sheet under my store to keep it viable. Then again, my store doesn't weigh much.

As if to warn of thin ice, the unemployment rate was a splash of cold water. Which is as it should be. We needed a splash about now...there was just too much thinking it was getting better and better. At the same time that my customers tell me -- there just aren't any jobs to be had. Again, that ain't going to get better in the off season.

I've always thought we had at least another year of depression era economy in Bend, and even at the end of next summer, the gains will be marginal. We may technically start to beat last year in sales, but I'm not sure I'd call that a 'recovery.'

Friday, October 2, 2009

I don't count a sales trend until I have three consecutive months under my belt.

Still, you have to have that first month....

September was the first month since July 07 that I was significantly higher than the previous year in the same month. (There were two other months in 2008 that beat the previous year by a bit.)

This is the first month in the last consecutive year that I've beat the previous year.

Not only did I beat September 2008, I fried it.

Even with the 5 fewer days (Labor Day and 4 Sundays off) I beat last year by 18%. If you take the daily average, I beat it by 32%. I basically matched the summer daily sales level.

That is such a Big Number, that I almost have to consider it a fluke. You know, how you throw out the worst and the best of a sample? -- this would be the best.

Comics and Graphic Novels showed the biggest improvement. I lost some longterm customers last year -- maybe 15% of subscribers. Some just failed to show up, others left town.

But over the last year I've slowly replaced them, one at a time, and we are back to previous numbers. Of course, it helps the totals that comics are probably a good 15% higher in prices this year.

The Categories.

1.) Comics. Up about 30%. The DC series, Blackest Night, has had a major impact on the monthlies.

2.) DVD's. Sold 4 times as many as last year, which wasn't hard to do what with selling them for roughly half price and zero profit...

3.) Sport cards were down by half. Not a big number, either way.

4.) Card games were up double, which makes sense since I had the hot product (2010) in stock all month at regular price.

5.) Boardgames were up double, but last year was unaccountably lower, compared to surrounding months.

6.) Books. Up marginally.

7. Toys. Down about 30%. I think these have been hit the hardest by the recession.

8.) Graphic novels. Also up by 30%, which is encouraging.

The only negative I can find is that the last 3 days of the month were just dreadful. Not an encouraging sign for October. Also, last October was relatively good, so it may be hard to beat. I've got high hopes for the new magic release -- I certainly spent enough money on it, so there is a chance. I also went and spent all the extra profit this month...plus. But the month bailed me out of my misstep by about 2/3rds

I'm not expecting to beat last October unless the Zendikar is explosive. (I'll be kicking myself, if it doesn't at least sell well.)

But after that, I'd like to shoot toward beating November and December of last year.

About Me

I'm Duncan McGeary, owner and/or operator for the last 33 years of Pegasus Books in Downtown Bend, Oregon. These days I'm writing books as well as selling them.
I'm the comic book guy. But even more so, I'm a book book guy. Books of all kinds. Big books and little books, children's and adult, fiction and non-fiction, hardback and paperback and trade paperback and graphic novels. Books with more words than pictures and books with more pictures than words. They are all part of the book world to me, and I love being surrounded by them every day.
I also have a second blog: Pegasus Books, where I list the product coming in over the next week.